Private developer to propose Canada’s first crude oil SPR on eastern coast

Private developer Triple Point Resources is proposing construction of Canada's first strategic petroleum reserves for crude storage in salt caverns on the nation's eastern coast, with a nameplate capacity up to 100 million barrels, driven primarily by changes in global energy security and a growing need for sovereignty, CEO Julie Lemieux said June 29.

"A prefeasibility study has been completed, and an option would be to build 15 caverns," Lemieux told Platts, each with a capacity 5 million to 6 million barrels.

"With the current geo-political crisis, Canada was not caught off-guard in terms of production," Lemieux said. "But we are the only G7 nation without a SPR, and we believe the time has come for that scenario to change."

The proposed facility would be at Fischells, Bay St. George, in Newfoundland and Labrador, and would entail an overall investment of some C$1 billion ($705 million) over time, which would include storage tanks and transshipment facilities, she said.

"It is a luxury to have salt caverns of that size" at Fishelles," she said. "We have already tested the salt, and typically it takes two years to build a cavern. We can build two at a time and stage the development."

The stockpile of oil for the planned SPR can be sourced from offshore Newfoundland and Labrador, another sovereign country that would like to store crude on the Eastern seaboard of North America and benefit refineries in the East Coast of Canada and the US, she said.

Ottawa keeps options open for proposals

Triple Point's Lemieux did not provide a specific timeline for submitting the proposal.

But the federal government is aware of the energy storage proposal in Newfoundland and welcomes such initiatives that help strengthen energy security, Natural Resources Canada spokesperson Marie Martin said in an email June 29 from Ottawa.

As the world's fourth-largest oil supplier and the second-largest within the International Energy Agency, Canada is a net exporter and remains exempt from holding stocks under the IEA Treaty, Martin said.

Canada has been meeting its agency's responsibilities as a major producer and exporter of oil to the world by supporting its current collective action through additional industry production of 23.6 million barrels, Martin said.

"Our LNG exports are also expanding, providing additional fuel to allies around the world," Martin said. "With Canadian production continuing to reach record highs, we will continue to supply domestic and global markets with reliable energy exports. We will continue to monitor our global role as well as Canadian infrastructure, transportation, and energy storage that support our energy security."

Canadian crude oil production is forecast to reach 5.786 million b/d in 2027, up from 5.527 million b/d in the current year, S&P Global Energy CERA said in its June analysis.

Canadian SPR could benefit 'sovereign entities'

The proposal of an SPR will make more "sense" for sovereign entities, OilCo CEO Jim Keating said from Newfoundland's capital, St. John's.

"We are not sure if private companies in Newfoundland would be interested in storage, unless you are a refinery operator," Keating said. "Our producers want to take crude to the market as soon as they can."

OilCo is an oil company owned by the Newfoundland and Labrador government that has equity stakes in the province's offshore oil fields.

Total oil production from the four Atlantic Canadian fields of Hibernia, Hebron, Terra Nova and White Rose fields averaged 312,786 b/d in April, the latest data from the Canada-Newfoundland Labrador Offshore Energy Regulator showed.

"But there may be some thinking that Canada could become a 'trusted' supplier, and the main customer for an SPR could potentially be other nations looking to secure large strategic reserves in a friendly place," Keating said. "These storage salt domes are adjacent to the ocean in ice-free areas of the Atlantic Ocean."

Separately, Alberta -- which is home to the main oil sands, heavy and light oil in Canada -- has merchant facilities in the province estimated at 60 million to 65 million barrels, the CERA report said.